GRAMOS CHEMICALS INDIA P. LTD,MUMBAI vs. ACIT 15(1)(2), MUMBAI

The assessee has filed this appeal challenging the order dated 12/08/2016 passed by ld. CIT(A)-24, Mumbai and it relates to A.Y.2012-13. The assessee is aggrieved by the decision of ld. CIT(A) in partially confirming addition of Rs.3.50 Crores made by AO.

The facts relating to the above said issue are stated in brief. The assessee is engaged in the business of manufacturing of chemicals used in paints. During the year under consideration, the assessee sold its chemical business to M/s. Chemetail Rai India Pvt. Ltd for a sum of M/s. Gramos Chemicals India Pvt. Ltd. Rs.7.25 Crores. Out of the above said sum, the assessee did not offer a sum of Rs.3.50 Crores for taxation on the ground that the same represents capital receipt arising on sale of „self-generated asset‟, i.e., it was the contention of the assessee that the acquisition cost of self generated asset is „Nil‟ and hence computation provision would fail. The break-up details of Rs.7.25 Crore is given below:-

The nature of asset related to the above said amount of Rs.3.50 crores was “customer data/ customer list/ customer network/ sales data; distribution network and rights and suppliers contracts”. The AO did not accept the contentions of the assessee. He also examined the business transfer agreement entered by the assessee with the buyer and noticed that assessee has signed a non-compete agreement also. The AO took the view that the amount of Rs.3.50 Crores is taxable as business receipts of the company and accordingly, assessed the same. The ld. CIT(A) confirmed the order passed by the AO and hence the assessee has filed this appeal.

The ld. AR contended that above said receipts arising on sale of self generated assets is not liable to tax. On the contrary, the ld. DR supported the order passed by ld. CIT(A).

We head the parties and perused the record. We noticed that ld. CIT(A) has confirmed the addition with the following observation:-

Even though the assessee has contended that they are self-generated assets, what we notice is that the nature of asset, viz., “customer data/ customer list/ customer network/ sales data; distribution network and rights and suppliers contracts” are in the nature of commercial information collated by the assessee out of its business records. In our view, the said commercial information cannot be called “self generated asset” like that of “Good will”, “brand name” etc. Hence, in our view, the AO was justified in treating these receipts as „business receipts‟ and in assessing the same. We noticed that the ld. CIT(A) has also rejected the claim of assessee. However, he has estimated the cost incurred in generating the details of asset at Rs.10.00 lakhs and allowed the deduction there of. In any case, we agree with the view of the tax authorities that the above said amount of Rs.3.50 crores is taxable and cannot be considered as exempt. Accordingly, we do not find any reason to interfere with the order passed by the ld. CIT(A) on this issue.

In the result, appeal filed by the assessee is dismissed.